Abstract Droughts can affect ecosystem CO2 fluxes directly or indirectly by changing plant community composition. However, it is unknown whether shifts in plant community composition buffer or amplify the response of ecosystem CO2 fluxes to droughts with different seasonal timing, as plant phenology and physiology of the different plant functional types respond differently to droughts. To identify the interaction of drought timing and plant community composition in regulating ecosystem CO2 fluxes, we conducted a three‐year manipulative experiment in which extreme droughts occurring in the early, mid and late growing seasons were separately imposed on experimental plot communities comprising graminoids, shrubs and their combination in a semi‐arid grassland of Inner Mongolia, China. Overall, mid‐season drought caused the largest negative effects regardless of plant community composition. In addition to decreasing aboveground biomass, mid‐season drought suppressed fluxes by reducing leaf photosynthetic rate, while early‐season and late‐season drought reduced fluxes mainly by shortening growing season length. All three community compositions had consistent responses to early‐season and mid‐season droughts. However, ecosystem CO2 fluxes in the combination community were less negatively affected by late‐season drought than in either shrub or graminoid communities because the growing season length was shortened less. Synthesis. Our results highlight that it is important to account for interactions of seasonal timing and plant community composition when predicting magnitude and pathways of drought effects on ecosystem carbon cycling.